Facebook Profits Rise, Time On Site Plunges

Facebook advertising revenue for its 2017 Q4 has risen 48 per cent and its quarterly operating profit grew 61 per cent even after time on the social media site by users plummeted 50 million hours over the quarter.

Mark Zuckerberg, CEO explains, “Already last quarter, we made changes to show fewer viral videos to make sure people’s time is well spent. In total, we made changes that reduced time spent on Facebook by roughly 50 million hours every day. By focusing on meaningful connections, our community and business will be stronger over the long term.”

Its Q4 advertising revenue jumped 48 per cent from the prior year from US$8.6bn to US$12.7bn, its Q4 operating profit rose 61 per cent from US$4.5bn to US$7.3bn. For its full year results, total revenue grew 47 per cent to US$40.6bn and its operating profit also increased by 63 per cent from US$12.4bn to US$20.2bn.

The Wall Street Journal noted shares fell 5 per cent in after-hours training due to the recent newsfeed changes.

Facebook Q4 and FY17 Earnings

Zuckerberg says, “2017 was a strong year for Facebook, but it was also a hard one. In 2018, we’re focused on making sure Facebook isn’t just fun to use, but also good for people’s well-being and for society. We’re doing this by encouraging meaningful connections between people rather than passive consumption of content.

Facebook, like other companies was impacted by the US government’s 2017 Tax Cuts and Jobs Act, as a result of this legislation, its fourth quarter and full year 2017 provision for income taxes increased by US$2.27bn, impacting its effective tax rate, net income and diluted EPS for such period.